June 8, 2013

Across Japan, technology firms and private investors are racing
to install devices that until recently they had little interest in:
solar panels. Massive solar parks are popping up by the dozen, and
companies are mounting panels atop warehouse and factory rooftops as
part of a rapid buildup that one developer likened to an “explosion.”

The
boom is striking in part because of how simply it was sparked — by a
little-noted government policy, implemented nearly a year ago, that
suddenly guaranteed generous payments to anybody selling renewable
energy, including solar power.

Because of that policy, known as a feed-in tariff,
Japan has become one of the world’s fastest-growing users of solar
energy, investors and analysts say, a shift that comes as this
resource-poor country tries to find clean and homegrown alternatives to
nuclear power. This year alone, Japan is forecast to install solar
panels with the capacity of five to seven modern nuclear reactors.

Before the 2011 meltdowns
at the Fukushima Daiichi plant, Japan had all but neglected renewable
forms of energy, instead emphasizing atomic power, which it hoped would
provide half of the nation’s energy by 2030. But the accident at
Fukushima forced the shuttering of the country’s 50 operable reactors,
only two of which have been restarted. The remaining shutdowns could
prove temporary, with Prime Minister Shinzo Abe pledging restarts of
reactors deemed safe. A majority of Japanese, though, remain opposed to
atomic energy, and analysts say the solar takeoff highlights Japan’s
appetite for other options.

There is a downside: Renewables are
several times pricier than nuclear power or fossil fuels such as coal,
oil and gas. The rising use of solar power means energy bills will
spike, potentially complicating Abe's plan to jump-start Japan’s long-foundering economy.

Most
consumers think that sacrifice is worthwhile, and they say nuclear
power has hidden cleanup and compensation costs that emerge only after
an accident. Fossil fuels, meanwhile, release harmful greenhouse gases
and must be imported from Australia, Russia, Indonesia and the Middle
East.

People here tended to support clean-energy projects even
before the nuclear disaster, but now there is “more interest in natural
energy,” said Moriaki Yoshikawa, the secretary general of an
environmental nonprofit organization, Eco Plan Fukui, which has helped
build five solar plants in a central region of Japan that hosts four
nuclear plants.

This year, Japan’s total solar capacity — 7.4
gigawatts at the end of 2012 — is set to roughly double, adding between
6.1 and 9.4 gigawatts, Bloomberg New Energy Finance said in a recent
report. Such growth would make Japan the second-fastest-growing solar
market behind China and leave it behind only Germany and Italy as
measured by total installed capacity. A gigawatt can supply power to an
estimated 250,000 homes.

Tariff terms

The feed-in tariff is the legacy
of Naoto Kan, Japan’s unpopular prime minister at the time of the
Fukushima disaster, who decided after the meltdowns that atomic power
was too dangerous for this earthquake-prone country. So, Kan made a deal with the opposition party:
He’d resign only after parliament cooperated to pass several pieces of
legislation, including a renewable-energy bill that established the
tariff. Japan, Kan said, should boost renewables to account for about
one-fifth of Japan’s energy mix by the 2020s. At the moment, they
account for about 10 percent, most of it from hydroelectric.

When it comes to energy, Kan said at the time, Japan needs to “start from scratch.”

The
tariff, launched in July, obligates utility companies to buy
electricity from renewable sources — solar, wind and geothermal, for
example — at fixed prices. In most cases, the utility companies are
buying the renewable-generated power from private individuals and
companies.

European countries have used similar tariffs to spur clean-energy booms, with the hope that widespread installation
would drive innovations and lower prices for solar technology.

The
feed-in tariff is fixed at an artificially high price to encourage
start-up investment. The investors, in many cases, aren’t cutting-edge
technology firms, but farmers, lumber companies and local governments.
Once they install solar panels, they also moonlight as power-generation
companies.

Under the terms of the feed-in tariff, they sell their
renewable-generated energy to the local utility company at rates
guaranteed for 20 years. The rates vary depending on the source, but
solar is the most generous. When the tariff was unveiled, sellers could
get about twice the rate in Germany and France.

Japan recently cut
that rate by 10 percent, a change that applies to new projects, not
those underway. But analysts say that the reduction is unlikely to slow
interest among solar developers.